Berge Bulk Shipping PTE Ltd v Taumata Plantations Limited & Ors [2025] EWCA Civ 876

[2025] EWCA Civ 876Case No CA-2024-002550
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2024] EWHC 2371 (Comm)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING’S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Christopher Hancock KC (sitting as a Deputy High Court Judge)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 10/07/2025
Before
LORD JUSTICE MALESLADY JUSTICE FALKLORD JUSTICE ZACAROLI
Between
BERGE BULK SHIPPING PTE LTDAppellant/TAUMATA PLANTATIONS LIMITEDRespondents/DefendantsTIAKI PLANTATIONS COMPANYRespondentOTPP NEW ZEALAND FOREST INVESTMENTS LIMITEDRespondent
Steven Berry KC & Michal Hain (instructed by Holman Fenwick Willan LLP) for AppellantDavid Bailey KC & James Goudkamp (instructed by Herbert Smith Freehills Kramer LLP) for RespondentsHearing Hearing dates: 24 and 25 June 2025
Approved JudgmentThis judgment was handed down remotely at 10.30am on 10 July 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................
[1]The issue in this appeal is whether the English court has jurisdiction in respect of claims brought by the appellant, the disponent owner of two vessels, under two Letters of Indemnity (‘LOIs’) provided in order to enable cargoes of timber to be discharged in India without production of the bills of lading. The LOIs, which were governed by English law and provided for the jurisdiction of the English court, were issued by and in the name of a now insolvent New Zealand company called TPT Shipping Ltd (‘Shipping’). Whether the English court has jurisdiction depends on whether there is a good arguable case that the respondents, three New Zealand companies (‘Taumata’, ‘Tiaki’ and ‘OTPP’, together referred to as the ‘Exporters’), are liable on the LOIs as Shipping’s undisclosed principals.[2]The judge, Christopher Hancock KC, held that there was not and, in consequence, that the English court has no jurisdiction to try the claims in this action. The appellant challenges that conclusion.[3]The parties and the judge addressed the undisclosed principals issue in two stages, applying the test of good arguable case. The first stage was to consider whether the Exporters were the undisclosed principals under the voyage charters of the vessels, which were entered into in the name of Shipping with no indication that it was acting otherwise than as a principal. The second was whether the Exporters were the undisclosed principals under the LOIs themselves. It was and is common ground that it is the second stage which matters, but each party submits that its position on the first issue provides support for its position on the second and decisive issue.[4]By a Respondent’s Notice the Exporters contend that, even if there is a good arguable case that they are liable as undisclosed principals, there is no serious question to be tried on the merits because the appellant has made a binding election to seek a remedy against Shipping and/or its right to claim against the Exporters has been extinguished as a result of the acceptance of its claim by Shipping’s liquidators. The judge did not find it necessary to deal with those issues and, because I agree with his conclusion on the undisclosed principals issue so that anything we said about the other issues would be obiter, it is unnecessary to address them in this judgment.

Good arguable case

[5]It is common ground that the test to be satisfied in order for jurisdiction to be established pursuant to CPR 6.33(2B) (contract containing a term to the effect that the court shall have jurisdiction) is that of good arguable case, and that what this means was accurately summarised by Mr

Justice Henshaw in Clifford Chance LLP v Société Générale SA [2023] EWHC 2682 (Comm):

‘79. The party alleging a binding jurisdiction agreement needs to show a good arguable case. In practice this means that: i) The party relying on the existence of the agreement must supply an evidential basis showing that it has the better argument (and not much the better argument). ii) If there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so. iii) The nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the existence of the agreement if there is a plausible (albeit contested) evidential basis for it.’ i) The party relying on the existence of the agreement must supply an evidential basis showing that it has the better argument (and not much the better argument). ii) If there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so. iii) The nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the existence of the agreement if there is a plausible (albeit contested) evidential basis for it.’

The undisclosed principal rule

[6]Agency is a consensual relationship which depends upon the consent of both parties, the existence of such consent being determined objectively, as explained in Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130, 1137:
‘The relationship of principal and agent can only be established by the consent of the principal and the agent. They will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognise it themselves and even if they have professed to disclaim it, as in Ex parte Delhasse 7 ChD 511. But the consent must have been given by each of them, either expressly or by implication from their words and conduct. Primarily one looks to what they said and did at the time of the alleged creation of the agency. Earlier words and conduct may afford evidence of a course of dealing in existence at that time as historical background. Later words and conduct may have some bearing, though likely to be less important.’
[7]Although the undisclosed principal rule has often been described as anomalous, it is firmly established that an agent who concludes a contract with a third party in his own name may bind his principal, so that the principal (as well as the agent) is both entitled to sue on the contract and liable on it, even though the fact that the contract was being concluded on behalf of a principal was not disclosed to the third party at the time. The circumstances in which this will occur were described by Lord Lloyd in Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199, 207:
‘The main features of the law relating to an undisclosed principal have been settled since at least at the end of the 18th century. A hundred years later, in 1872, Blackburn J said in Armstrong v Stokes (1872) LR 7 QB 598, 604 that it had often been doubted whether it was originally right to hold that an undisclosed principal was liable to be sued on the contract made by an agent on his behalf, but added that “doubts of this kind come now too late”. For present purposes the law can be summarised shortly. (1) An undisclosed principal may sue and be sued on a contract made by an agent on his behalf, acting within the scope of his actual authority. (2) In entering into the contract, the agent must intend to act on the principal’s behalf. (3) The agent of an undisclosed principal may also sue and be sued on the contract. (4) Any defence which the third party may have against the agent is available against his principal. (5) The terms of the contract may, expressly or by implication, exclude the principal’s right to sue and his liability to be sued. The contract itself, or the circumstances surrounding the contract, may show that the agent is the true and only principal.’
[8]This summary was approved by the Supreme Court in Playboy Club London Ltd v Banca Nazionale del Lavoro SpA [2018] UKSC 43, [2018] 1 WLR 4041, para 12, with Lord Sumption adding that ‘the third party must irrevocably elect whether to sue the agent or the undisclosed principal’.[9]It is notable that Lord Lloyd’s summary makes clear that the agent must act within the scope of his actual authority. Bowstead & Reynolds on Agency, 23rd Edition (2024), para 8-070, is to the same effect:
‘The agent must have actual authority to act so as to bind and entitle the principal to the transaction in question, though this may of course be express or implied.’
[10]The relevant principles were discussed further by Mr Justice Leggatt in The Magellan Spirit [2016] EWHC 454 (Comm), [2017] 1 All ER (Comm) 241, a case with some similarities to the present case. He suggested that there is a presumption against finding that a contract was made on behalf of an undisclosed principal, which was only capable of being rebutted by convincing proof:
‘28. … Where a contract is made by or on behalf of a named legal person and there is nothing in the terms of the contract or surrounding circumstances to indicate to the other contracting party that the named person is making the contract as an agent, then the presumption must be that the named person is contracting as a principal. That presumption is capable of being displaced; but in order to displace it, convincing proof is needed that the named party was – contrary to appearances – contracting on behalf of an undisclosed principal.’
[11]I respectfully agree with this analysis, but it may benefit from a little unpacking. The undisclosed principal rule will only ever be relevant when there is nothing in the terms of the contract or surrounding circumstances to indicate to the other contracting party that the named person is making the contract as an agent. If it were otherwise, the principal would not be undisclosed. In such a case, the starting point is that the named person is not making the contract as an agent, but it is open to the undisclosed principal or, as in this case, the third party to seek to prove otherwise. The standard of proof required to do so is the ordinary civil standard of the balance of probability. Mr Justice Leggatt’s reference to the need for ‘convincing proof’ does not mean that there is some heightened standard of proof in undisclosed principal cases over and above the ordinary civil standard (cf. his explanation of the term ‘convincing proof’ as used in the context of rectification in Tartsinis v Navona Management Co [2015] EWHC 57 (Comm), paras 84 to 86), but reflects the fact that a contract, particularly if embodied in a formal document, is likely to be what it appears to be. Put more simply, perhaps, the proof of agency must be convincing because unconvincing proof (if such a thing is possible at all) would not be much use to show that the contract is not what it appears to be.[12]I agree also with Mr Justice Leggatt’s further point in The Magellan Spirit that in order for an agency relationship to be implied from conduct, it is necessary to identify conduct which is only consistent with a mutual intention that the contract concluded in the agent’s name is to bind the principal:
‘29. … In principle what must be shown is conduct from which (i) a reasonable person in the position of [the agent] would have understood that it was authorised to enter into the charter as agent of [the principal] and (ii) a reasonable person in the position of [the principal] would have understood that [the agent] was agreeing to do so. As in any case where an agreement is sought to be implied from conduct, it is not enough to point to conduct which was consistent with an agreement or mutual intention that [the agent] would contract as agent of [the principal]. It is necessary to identify conduct which was only consistent with such an agreement or mutual intention and inconsistent with any other intended relationship between [the principal and the agent]. Put another way, it must be fatal to the implication of an agency relationship if the parties would have or might have acted as they did in the absence of such a relationship: see, by analogy, cases such as The Aramis [1989] 1 Lloyd’s Rep 213 and The Gudermes [1993] 1 Lloyd’s Rep 311.’

The background

[13]For many years the Exporters have owned, or had logging rights over, forestry plantations in New Zealand. They do not manage these forests themselves, such management being undertaken by a company called Manulife, which is also responsible for the sale and marketing of logs to customers in New Zealand. Approximately 50% of the logs harvested for the Exporters are sold to customers in New Zealand, with the remainder being exported to overseas markets, including China and India.[14]The sale and marketing of logs for export was carried out by a company called TPT Forests Ltd (‘Forests’), with the relationship between Forests and each of the Exporters being governed by Log Marketing and Sales Agency Agreements. Those Agency Agreements, as I shall call them, are considered further below. They make clear that, in everything it did pursuant to the agreements, Forests acted as the agent of the Exporters. That included the chartering of vessels for the carriage of logs from New Zealand to the export markets. There is, therefore, no doubt that before Shipping came on to the scene, the Exporters were the principals of Forests under charterparties concluded in the name of Forests, apparently without disclosure to the shipowners that Forests was acting as an agent. At that time, therefore, the undisclosed principal rule applied to the charterparties concluded by Forests.[15]In 2004 the TPT Group, of which Forests was a part, decided that a new company should be established to undertake the chartering of vessels for the carriage of the Exporters’ logs. The rationale for this was explained in a letter from Forests to Tiaki dated 30th November 2005. It is common ground that the same or materially the same explanation was also given to Taumata and OTPP. The letter stated that:
‘As part of the service provided by [Forests], we continue to consider options to improve shipping to off-shore markets. Our work in this area has led to the establishment of [Shipping], a wholly-owned subsidiary of TPT Group Limited. From time to time, [Shipping] will:  charter ocean going vessels suitable for log shipment;  enter into agreements with [Forests] (acting as your agent) for the shipment of logs to off-shore markets;  be responsible for the shipment of logs; and  be paid by [Forests] (acting as your agent) for shipping services performed. [Shipping] operations will be kept separate to the operations of [Forests] to ensure that the risks inherent in chartering vessels are effectively “ring fenced”. … Accounting Where [Forests] engages [Shipping] to ship logs overseas, it is required to do so in accordance with the terms of the Log Marketing & Sales Agreement. All information about ship charters and rates is available upon request. As we do now [Forests] will recover certain costs in accordance with the Log Marketing & Sales Agreement. The costs of shipping will be recovered in the same manner as they would be where [Forests] engages an unrelated third party to ship the logs. Any costs, losses and expenses incurred or suffered by [Shipping] which fall outside the contracted rates in the shipping contract between [Forests] and [Shipping] will not be recoverable from you. This is where [Shipping] provides a protection for you as suppliers. …’ (Emphasis in original).
From time to time, [Shipping] will:

Accounting

[16]Mr Steven Berry KC for the appellant submitted that this letter shows that the purpose of establishing Shipping was to protect (or ring fence) Forests, but not the Exporters, from the risks inherent in chartering. I cannot accept this. Although this may have been the private intention within the TPT Group, or at least the primary intention, the clear message of the letter as a whole is that the purpose of establishing Shipping was that the risks inherent in chartering vessels would be retained by Shipping, which would act as the charterer of the vessels concerned. The letter contemplated further that there would be an agreement between Shipping and Forests, entered into by Forests in its capacity as agent for the Exporters, and that Shipping would be paid by Forests (acting as the Exporters’ agent) for the shipping services which it performed.[17]The letter presented this new arrangement as a benefit for the Exporters, which would not make sense if its purpose was merely to protect Forests, leaving the Exporters exposed to all the chartering risks. It made clear (with emphasis in bold) that any costs, losses and expenses incurred or suffered by Shipping which were not provided for in the contract to be concluded between Shipping and Forests would not be recoverable from the Exporters. The letter emphasised that Forests would be acting as the Exporters’ agent. In contrast, it said no such thing about Shipping, which is a striking omission if it was intended that Shipping would charter vessels as the agent of the Exporters.

The Agency Agreements

[18]On 21st September 2007 a new Agency Agreement was concluded between Taumata and Forests, which was stated to commence on 1st December 2006. At or about the same time Forests concluded new Agency Agreements with Tiaki and OTPP on the same or similar terms. The parties were content to treat the Taumata agreement as representative of all three agreements and I shall do likewise.[19]The Agency Agreement appointed Forests as the exclusive sales and marketing agent for the sale of all export logs produced by Taumata. However, clause 1.7 provided that:
‘For the avoidance of doubt, [Forests] acknowledges and agrees that it has no power to enter into any agreement or bind Taumata in any way: 1.7.1 without the prior written approval of the Manager [i.e. Manulife]; or 1.7.2 without authority under any express provision of this agreement.’ 1.7.1 without the prior written approval of the Manager [i.e. Manulife]; or 1.7.2 without authority under any express provision of this agreement.’
[20]The terms applicable to export sales were dealt with in clause 5. This provided, among other things, for the purchase price to be paid by way of an irrevocable letter of credit in favour of Forests on behalf of Taumata, to be opened before the arrival of the carrying vessel at the loading port, with the qualification in clause 5.1.4 that:
‘In the event that the LC is not in place then the sale shall be managed under Request for Authorisation/Letter of Indemnity (RFA/LOI) policy, refer to Appendix 2.’
[21]Clause 5.2 provided:
‘Shipping Terms 5.2.1 [Forests] shall use its commercially reasonable endeavours to negotiate the most advantageous shipping terms to Taumata (taking into account availability of vessels, preferred dates of shipment, securing shipping services in advance and other variations outside the reasonable control of [Forests]) on the following terms and conditions: 5.2.1(a) The loading ports shall be the Ports as agreed by the Manager. 5.2.1(b) The loading and discharge terms shall be customary quick dispatch (CQD or demurrage dispatch (dem/des)). This can be changed with the prior written approval of the Manager. 5.2.1(c) Subject to clause 5.2.1(f), the ship charter shall be between [Forests] and the shipping company on behalf of Taumata. 5.2.1(d) [Forests] shall promptly provide the Manager with all information requested by the Manager regarding ship charters and rates arranged in respect of the Goods when required. 5.2.1(e) All commissions received by [Forests] such as Address Commission shall be paid to Taumata. 5.2.1(f) From time to time [Forests] may have access to vessels chartered by [Shipping] and may offer to the Manager shipment of Goods on such vessels. Any acceptance by the Manager of such offers shall be subject to [Forests] and the Manager reaching agreement as to the terms of the shipment (including, but not limited to, the timing of payments by Taumata to [Forests] for shipping).’ 5.2.1(a) The loading ports shall be the Ports as agreed by the Manager. 5.2.1(b) The loading and discharge terms shall be customary quick dispatch (CQD or demurrage dispatch (dem/des)). This can be changed with the prior written approval of the Manager. 5.2.1(c) Subject to clause 5.2.1(f), the ship charter shall be between [Forests] and the shipping company on behalf of Taumata. 5.2.1(d) [Forests] shall promptly provide the Manager with all information requested by the Manager regarding ship charters and rates arranged in respect of the Goods when required. 5.2.1(e) All commissions received by [Forests] such as Address Commission shall be paid to Taumata. 5.2.1(f) From time to time [Forests] may have access to vessels chartered by [Shipping] and may offer to the Manager shipment of Goods on such vessels. Any acceptance by the Manager of such offers shall be subject to [Forests] and the Manager reaching agreement as to the terms of the shipment (including, but not limited to, the timing of payments by Taumata to [Forests] for shipping).’
[22]Accordingly the clause contemplated two possible ways in which shipments of logs might be arranged. The first, in paragraph (c), was that (as had been the practice before the establishment of Shipping) Forests would conclude a charterparty with the shipping company and that, in doing so, it would act as an agent on behalf of Taumata. The second, in paragraph (f), was that Forests would arrange for the carriage of the Exporters’ logs on vessels chartered by Shipping. In contrast with paragraph (c), there was no suggestion in paragraph (f) that Shipping would be acting as an agent on behalf of Taumata. Once again, that is a striking omission if the parties had intended the Exporters to be undisclosed principals under the charterparties concluded by Shipping. Such an intention would have been inconsistent with the purpose of establishing Shipping as it had been explained to the Exporters.[23]Clause 12 of the Agency Agreement provided for Forests to remit funds received from export sales to Taumata after deduction of (among other things) ocean freight, its marketing fee, and other associated costs.[24]As foreshadowed in clause 5.1.4, Appendix 2 set out a detailed procedure which was to apply if a conforming letter of credit was not in place three days prior to the commencement of loading and if an LOI was required for discharging the cargo because original bills of lading had not been received by the agent at the discharge port. Appendix 2 provided that in such circumstances Forests should prepare a Request for Authorisation for approval by Manulife, the Exporters’ Manager.[25]The combination of clause 1.7 and Appendix 2 made clear that Forests did not have authority to issue an LOI binding on the Exporters otherwise than in accordance with the Appendix 2 procedure.

The Shipping Services Agreement

[26]A Shipping Services Agreement was concluded between Forests and Shipping in 2012, although it may have replaced an earlier agreement. It recorded that the Exporters had appointed Forests as their agent, authorised to undertake the marketing, sale and export of logs on behalf of the Exporters; and that Shipping was in the business of providing shipping services using chartered vessels and independent carriers. The agreement set out the terms on which Shipping agreed to provide shipping services to the Exporters.[27]These included, by clause 4.1, that:
‘Each Export Client is responsible for the payment of the cost of carriage and all other moneys payable for the Services in respect of the handling and shipment of Products for that Export Client.’
[28]The ‘Export Clients’ were the Exporters and the ‘Services’ were defined as ‘all services for the handling and shipment of the Products from the time of receipt of the Products at the dispatch port to the point of delivery at the destination Port’.[29]Clause 5.1 of the agreement provided that:
‘[Shipping] shall provide the Services for and on behalf of the Export Clients in accordance with the requirements of this Agreement.’
[30]The agreement provided that Forests dealt with Shipping solely in its capacity as agent for the Exporters and contained a warranty by Forests that it was authorised to represent the Exporters in all dealings with Shipping. For its part, Shipping agreed to accept instructions from Forests in respect of the handling and shipment of products on behalf of the Exporters.

The business carried on by Shipping

[31]It appears that the majority of the business carried on by Shipping involved the carriage of the Exporters’ logs, but that a significant part of its business was independent of the Exporters. During the five year period 2016-2020, Shipping performed a total of 873 fixtures of which 555 were for the carriage of the Exporters’ logs. Further, in cases where the Exporters did not provide a full cargo, Shipping was free to and did sell space on its chartered-in vessels to other New Zealand producers, and that business would generate freight earnings for Shipping’s own account.[32]It was very common for bills of lading not to be available at the discharge port. During the same five year period, 507 voyages (or 58% of the total) involved delivery against an LOI because the bills of lading had not arrived at the discharge port in time. None of these deliveries had given rise to any problem.

The COSMOS HARMONY shipment

[33]The first of the two shipments with which we are concerned was a shipment of logs on board the vessel COSMOS HARMONY. The voyage charter between the appellant as owner and Shipping as charterer was concluded by an email recap dated 25th September 2019 for a voyage from New Zealand ports to China or Kandla, India. It provided for a demurrage rate of US $11,500 per day and a dispatch rate of US $5,750 per day, and for an address commission of 2.5% of the freight which, depending on the voyage, was either US $29.90 or US $36 per JAS m 3 of cargo (we were told that ‘JAS’ stands for ‘Japanese Agricultural Standard’). It provided also for the potential issue of an LOI in the event that the original bills of lading were not available at the discharge port:
‘Clause 67. LETTER OF INDEMNITY In the event that the original Bill(s) of Lading are not available when the Vessel arrives at discharge port(s), Charterers may request Owners to discharge the cargo without presentation of the original Bill(s) of Lading. Charterers will indemnify Owners against all consequences arising from Owners conforming to Charterer’s request to discharge the cargo without the presentation of the original Bill(s) of Lading. If required, Charterers are to issue a Letter of Indemnity to Owners in accordance with International Group of P&I Clubs wording. Letters of Indemnity shall be signed and stamped on Charterer’s letterhead by Charterers only. Such Letter of Indemnity shall automatically become “null and void” upon presentation to Owner/Master of an original Bill of Lading by the parties to whom the goods were discharged, or by their duly authorised Agent.’
[34]Thus the charterer was entitled, but not bound, to request delivery without production of the original bills of lading. The owner was entitled to refuse such a request unless the charterer provided an LOI in the agreed form, but if the charterer did so, it was bound to comply.[35]The cargo, a total of 18,375 JAS m 3 of pine logs, was sold by Forests, acting as an agent for one or more of the Exporters, by a contract dated 30th October 2019. The buyer was a Singapore company called Amrose Singapore Pte Ltd. The discharge port was specified as Kandla, India. The COSMOS HARMONY or sub, with an ETA at the load port of 2nd November 2019, was identified in the sale contract as the carrying vessel. Demurrage and dispatch were for the buyer’s account, with the same rates as in the charterparty.[36]Thus, although the Exporters would be liable to reimburse Shipping for any demurrage incurred under the charterparty as a result of delay in discharging (or would be given credit for any dispatch earned), they would be entitled to recover that demurrage from Amrose (or would have to credit any dispatch) under the sale contract. Ultimately, therefore, so long as all parties remained solvent, it was the buyer of the logs who would benefit from ensuring that there was no delay in discharging the vessel.[37]Although the voyage charter was concluded before the sale contract, forecasts of log shipments were prepared considerably in advance, and it is clear from the recap that the likely voyage was always from Tauranga in New Zealand to Kandla in India, although there was flexibility to load at a different port in New Zealand and to send the vessel to discharge in China if necessary.[38]Loading at Tauranga was completed by 5th November 2019 and an order bill of lading was issued naming Forests as the shipper, with a different Singapore company as the notify party. The bill of lading was issued on behalf of the head owner, so that on its face it evidenced a contract of carriage between the head owner and Forests.[39]The bill was not available when the vessel was approaching the discharge port and it was therefore recognised that discharge of the vessel would be delayed unless LOIs were provided, with the consequence that the receiver would not obtain access to the cargo and demurrage was likely to be incurred. Accordingly Amrose provided an LOI to Shipping, and Shipping sought the approval of Forests for the issue of an LOI to the appellant. Approval by Forests was initially given in an email dated 1st December 2019. However, it transpired that one of the letters of credit due to be issued to pay for the logs was missing, as a result of which there were further exchanges between Shipping and Forests. The result of these exchanges was that Forests approved the issue of the LOI, but on the basis that its issue should be left as late as possible in order to allow time for the letter of credit to come through.[40]In the event the LOI was issued by Shipping on 16th January 2020. It was in standard terms, on Shipping’s letterhead, and addressed to the appellant. It recorded a request by Shipping to the appellant to deliver the cargo to the buyer’s agent at Kandla without production of the original bill of lading and provided that:
‘In consideration of your complying with our above request, we hereby agree as follows: 1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of delivering the cargo without production of the original bill of lading, in accordance with our request. …’
[41]Forests did not at any time use the Request for Authorisation procedure set out in Appendix 2 of the Agency Agreement and did not seek the approval of the Exporters or their Manager for the issue of the LOI.[42]An LOI was in turn provided by the appellant to the head owner of the vessel.

The TS INDEX shipment

[43]The second shipment, on a vessel called the TS INDEX, followed the same course. The charterparty was dated 15th November 2019; the sale contract, for a total of 10,000 JAS m 3 of pine logs, was dated 5th December 2019; and the bill of lading was dated 23rd December 2019. Once again, the original bill of lading was not available at the discharge port and LOIs were therefore issued. Before issuing an LOI to the appellant, Shipping sought and obtained the approval of Forests, but Forests did not use the RFA procedure set out in Appendix 2 of the Agency Agreement and did not seek the approval of the Exporters or their Manager for the issue of the LOI.

The XING ZHI HAI shipment

[44]There was a third shipment in issue in the court below, where the disponent owner from whom Shipping chartered the vessel XING ZHI HAI was not the appellant but a company called Yangtze Navigation (Asia) Co Ltd. Yangtze has not appealed against the judge’s decision and accordingly we are not concerned with that shipment.

Events after discharge

[45]Following discharge of the COSMOS HARMONY and TS INDEX cargoes, it appears that Arnav Shipping Pvt Ltd, the agent at Kandla, released the cargoes to Amrose without requiring presentation of original bills of lading, that disputes arose between Amrose and its financial backers, and that, in the result, those financial backers arrested vessels and brought claims against the head owners alleging misdelivery under the bill of lading contracts, which (in turn) resulted in a cascade of claims down through the letters of indemnity.[46]Amrose was reckoned to be insolvent (as determined, in the event, by Shipping’s liquidators). Shipping called in administrators on 20th October 2020, ultimately leading to a liquidation process.[47]Yangtze commenced these proceedings against Shipping, seeking and obtaining a mandatory injunction requiring it to perform its obligations under the LOI issued to enable discharge of the XING ZHI HAI. When Shipping failed to comply, Yangtze sought and obtained a worldwide freezing order against it, which was later varied to take account of Shipping’s administration and then liquidation. The appellant was later added as a claimant in relation to the other LOIs.[48]By a re-amended claim form dated 13th March 2023 Yangtze and the appellant claimed against Shipping, Forests and the Exporters under the LOIs. The claim form was served on the Exporters in New Zealand pursuant to CPR 6.33(2B) without needing the permission of the court, on the basis that the Exporters were Shipping’s undisclosed principals under the LOIs and that the LOIs provide for the jurisdiction of the English court.[49]Forests and the Exporters challenged the jurisdiction of the English court. It was their challenge, together with their challenge to jurisdiction in respect of Yangtze’s claim, which came before the judge.

The judgment

[50]The judge dealt first with the claim against Forests, holding that there was no good arguable case that Forests was an undisclosed principal to the charterparties or the LOIs. The appellant has not challenged those decisions. Turning to the claim against the Exporters, the judge held that the Exporters’ case was to be preferred. In short, he considered that in entering into the charterparties, Shipping acted as principal and not as agent for the Exporters. His essential reasoning was that the Agency Agreements envisaged that when Shipping was involved, clause 5.2.1(f) would apply, in which case Shipping was to act as a principal, in contrast with the position under clause 5.2.1(c), when Forests would act as agent for the Exporters, and that this was consistent with the fact that the charterparties were concluded by Shipping before they knew whose cargoes would be carried on board.[51]As to the LOIs, again

the judge preferred the Exporters’ case, saying at para 74 that:

‘I have already found that Forests have the better of the argument that the LOIs were issued by Shipping on their own behalf. If I am right in this conclusion, then this argument falls away, since there is no evidence that the Exporters authorised the issuance of the LOIs other than through the agency of Forests.’
[52]That appears to have been a reference back to what

the judge had said at para 64:

‘For all of the above reasons, I hold that the Owners have no good arguable case against Forests that this Court has jurisdiction. Accordingly, service as against Forests should be set aside.’
[53]The judge added that if he was wrong in relation to Forests, the Agency Agreements provided in Appendix 2 for a particular regime to be followed for the authorisation of an LOI, that this regime had not been followed, and that if Forests had indeed authorised the issue of LOIs, they had done so without the Exporters’ authority.

The appellant’s submissions

[54]For the appellant Mr Berry recognised that the judge had made an evaluative decision, so that he needed to identify some logical flaw or other clear error in the judge’s reasoning if the appeal was to succeed (In re Sprintroom Ltd [2019] EWCA Civ 932, para 76). As to this, he submitted, in effect, that the judge had misunderstood his own judgment. Contrary to what he said at para 74, he had not found at para 64 that the LOIs were issued by Shipping on its own behalf, only that there was no good arguable case that Forests was acting as Shipping’s undisclosed principal. Accordingly there was a flaw in the judge’s reasoning, so that this court was required to reconsider the matter for itself.[55]As to the charterparties, Mr Berry submitted that the appellant had the better argument that Shipping had been acting as the agent of the Exporters, or at any rate that there was a plausible evidential basis for so concluding. He relied on five main points:(1) Before Shipping was established, charterparties were concluded by Forests as agent for the Exporters.(2) When Shipping was established, it took over the role previously performed by Forests, also acting as agent for the Exporters.(3) Clause 5.1 of the Shipping Services Agreement provided that Shipping would provide the Services ‘for and on behalf of’ the Exporters; this was classic agency language.(4) The flow of funds meant that it was the Exporters and not Shipping which had an economic interest in the charterparties: all freight and demurrage costs were passed to the Exporters, who were also credited with dispatch when this was earned; even the address commission was credited to the Exporters.(5) Shipping’s accounts were inconsistent with Shipping having acted as a principal: freight and other costs paid to the appellant were not shown as an expense in the accounts, and freight reimbursed to Shipping by the Exporters was not shown as income, as they ought to have been if Shipping was acting as a principal.[56]Mr Berry submitted that, if there was a good arguable case that the Exporters were undisclosed principals to the charterparties, it followed that there was similarly a good arguable case that they were undisclosed principals to the LOIs, in particular as it was the Exporters who benefited from the issue of the LOIs by avoiding the demurrage for which they would be liable in the event of the vessels being delayed at the discharge port.[57]However, Mr Berry had to recognise that the procedure set out in Appendix 2 of the Agency Agreements had not been followed. Shipping had requested approval for the issue of LOIs and Forests had given that approval, but had done so without reference to the Exporters which was contrary to the stipulated procedure. Mr Berry sought to overcome this difficulty in two ways. First, he submitted that the procedure set out in Appendix 2 may have fallen into disuse by 2019, so that there was no longer any requirement that it be followed, with the result that Forests had actual authority to authorise the issue of LOIs without reference to the Exporters because the limitation in its authority contained in Appendix 2 no longer applied. Second, he submitted, relying on what was said by His Honour Judge Chambers QC in AJU Remicon Co Ltd v Alida Shipping Co Ltd [2007] EWHC 2246 (Comm), that it was enough that Forests had apparent or ostensible authority to authorise the issue of LOIs on behalf of the Exporters. Ultimately he accepted that he needed to win on this second point, which had not been taken in the court below, if the appeal was to succeed.

Analysis

[58]I should say at the outset that I do not accept that the judge misunderstood his judgment. Although it is strictly true that what he said in para 74 (that the LOIs were issued by Shipping on its own behalf) did not precisely reflect what he had said in para 64 (that there was no good arguable case that Forests was Shipping’s undisclosed principal), when the judgment is read as a whole, including the judge’s reasons for his conclusions at para 64, it is plain that what he meant when addressing the claim against Forests was indeed that Shipping had acted as a principal in issuing the LOIs.[59]Be that as it may, if it is open to us to reconsider the matter, I consider that the judge’s decision was correct.[60]I begin with the charterparties, although ultimately it is only the LOIs which really matter. In my judgment the Exporters have the better of the argument that Shipping entered into the charterparties as a principal and not as their agent. As I have already explained, the whole purpose of establishing Shipping was to insulate both Forests and the Exporters from the risks inherent in acting as the charterer of the carrying vessels. That purpose is inconsistent with any intention that Shipping should act as agents for the Exporters in entering into the charterparties. This is a highly material factor when considering whether there was the necessary consent on the part of the Exporters that Shipping should act in this capacity (Dinglis Management Ltd v Dinglis Properties Ltd [2019] EWCA Civ 127, paras 24 and 33 to 35).[61]The insulation of Forest and the Exporters from any obligations as charterer of the vessels was carried into effect in the Agency Agreements, which draw a clear distinction between paragraphs (c) and (f) of clause 5.2.1. In the latter case, which was to apply when Shipping were involved, there was to be no agency relationship.[62]Against this clear contractual background demonstrating that Shipping should not act as the agent of the Exporters when concluding charterparties, the factors relied on by Mr Berry carry little weight. While the language of clause 5.1 of the Shipping Services Agreement (‘for and on behalf of’) is consistent with agency, it is not inconsistent with any other relationship as both ‘for’ and ‘on behalf of’ may have the more general meaning of ‘for the benefit of’ (cf. Rochdale Metropolitan Borough Council v Dixon [2011] EWCA Civ 1173, [2012] PTSR 1336, para 49). I was, with respect, not impressed by Mr Berry’s submission that when the two terms ‘for’ and ‘on behalf of’ are put together they can only indicate the agency of Shipping. The Shipping Services Agreement must be interpreted as a whole in the light of the background and purpose which I have described. It contains many references to agency, but these all relate to the status of Forests as agent of the Exporters, with Forests being referred to throughout as ‘the Agent’. If it was intended that Shipping should act as agent for the Exporters, the failure to say so in terms would be a surprising omission.[63]I accept that, as between the Exporters and Shipping, it was the Exporters who had an economic interest in the charterparties, in that they were required to reimburse Shipping for freight and demurrage, and took the benefit of dispatch and address commission, but I do not accept that this necessarily points to Shipping having acted as the Exporters’ agent. It is at least equally consistent with an arrangement whereby Shipping would contract as a principal, but on the basis that it would be in effect indemnified by the Exporters. Further, while the Exporters were liable to reimburse Shipping for demurrage, they were entitled to recover this from Amrose under the sale contract (and were required to account for dispatch). As to Shipping’s accounts, unaudited special purpose statements prepared under New Zealand legislation, I agree with the judge that without expert evidence, this is a neutral factor.[64]I agree with the judge also that the timing of the charterparties, concluded as they were before the sale contracts had been concluded, provides some support for the view that Shipping did not enter into the charterparties as agent for the Exporters. At the time when the charterparties were concluded, it appears not to have been finally decided whose logs would be carried and in some cases the Exporters did not provide a full cargo, leaving Shipping free to carry parcels for other exporters for its own account. If we take the charterparty of the COSMOS HARMONY as an example, the likely load port was Tauranga, where logs from all three of the Exporters might be loaded, but there was also an option for other loading ports in the North Island of New Zealand, where there might be a different shipper and, as indicated above, many of the fixtures concluded by Shipping did not involve the Exporters at all. In these circumstances, if Shipping did intend to act as an agent, there would have been no clarity as to which (if any) of the Exporters was to be regarded as Shipping’s principal when the charterparties were concluded.[65]Turning to the LOIs, the starting point, in view of what I have concluded so far, is that the Exporters have the better of the argument that Shipping had entered into the charterparties as a principal. That is itself a powerful reason to conclude that the LOIs were also issued by Shipping as a principal and not as an agent for the Exporters.[66]Even if that conclusion is mistaken, however, in order for there to be an agency relationship between the Exporters and Shipping for the issue of the LOIs, it would need to be shown objectively from what they said and did that they each gave their consent to the existence of such a relationship. In my judgment the Exporters have the better of the argument that Shipping nor the Exporters gave such consent.[67]As to Shipping, Mr Berry relied on the fact that Shipping had sought the approval of Forests, purportedly acting as agent for the Exporters, and that such approval had been given, before the LOIs were issued. But as the judge said, that is readily explained on the basis that once the logs were discharged and released to the buyer, the Exporters would lose their security for payment of the purchase price, at any rate in a case where letters of credit had not been opened. Although Shipping was not a party to the bill of lading contracts, until such time as the bills were negotiated through the banking chain that contract remained a contract with the shippers (i.e. Forests, acting as agent for the Exporters), under which the head owners were obliged to deliver the logs against production of the bills of lading. It therefore made sense to obtain Forests’ agreement if delivery was to be effected in some other way. Moreover, as Mr David Bailey KC for the Exporters submitted, the request for Forests’ approval did not necessarily indicate that Shipping was looking to Forests (or the Exporters) for reimbursement in the event that it was called on to pay under the LOIs. The party from whom it would naturally seek reimbursement was Amrose, from whom it had obtained a back to back LOI before agreeing to the release of the logs. For these reasons the conduct of Shipping does not indicate that it was consenting to issue the LOIs as an agent for the Exporters and certainly cannot be regarded as inconsistent with any other explanation.[68]As to the Exporters themselves, Appendix 2 makes it clear that they did not give any consent to the issue of LOIs on their behalf, even in a case where Forests did enter into a charterparty as their agent in accordance with clause 5.2.1(c) of the Agency Agreement, unless the procedure set out in Appendix 2 was followed. Still less can they be regarded as having given any such consent when Shipping was the charterer and clause 5.2.1(f) applied. I would not accept either of Mr Berry’s arguments for circumventing this express limitation on the actual authority conferred on Forests.[69]The suggestion that Appendix 2 had somehow fallen into disuse is entirely speculative, as the judge said. This is a case where there has been a considerable volume of evidence and documentary disclosure, perhaps rather more than might be expected in a typical jurisdiction challenge. But there is no plausible basis in the evidence, or at least nothing drawn to the judge’s or our attention, for supposing that the Exporters had agreed to abandon the Appendix 2 procedure, and in fairness Mr Berry did not ultimately press this first argument.[70]The second argument was that Forests had apparent or ostensible authority to authorise the issue of LOIs on behalf of the Exporters, and that this meant that it should be treated as having actual authority. Mr Berry relied on AJU Remicon case. In that case a charterparty was purportedly concluded between the claimant and the defendant through a chain of brokers. One of the issues was whether a broker purportedly acting on behalf of the claimant had authority to do so. The Deputy

Judge identified the following principle in the course of his judgment:

‘18. It seems to me that where an employee, acting within his ostensible authority, gives instructions to a broker who makes an agreement with a third party in reliance upon that ostensible authority, the broker has actual authority to make the agreement in question. As against the broker the principal is “estopped” from denying the employee’s authority with the consequence that the broker acquires actual authority to act. This means that, if at the relevant time, Mr Lim no longer had authority to charter vessels in the name of ATC or AFS but that he retained ostensible authority to do so and Mr Kong relied upon that authority in making the charterparty, then ATC or AFS became a party to the arbitration agreement.’
[71]Mr Berry submitted that Forests had ostensible authority to authorise the issue of LOIs on behalf of the Exporters, so that the Exporters were estopped from denying Forests’ authority, with the consequence that Forests had acquired actual authority to authorise Shipping to issue the LOIs.[72]The first question arising is whether this argument, which was not advanced in the court below, is open to the appellant in this court. The principles which apply to the taking of a new point on an appeal after trial are most recently set out in The Dijilah [2024] EWCA Civ 580, [2025] 1 All ER (Comm) 97 paras 23 to 31, but the same principles apply to an interlocutory appeal (Rana v Ealing London Borough Council [2018] EWCA Civ 2074, [2019] 1 All ER 1078, para 20). They include that it will usually be fatal to the new point being permitted to be raised if there is a real possibility that, had the point been taken below, evidence could have been adduced which might have affected the outcome.[73]I would not permit this new point to be raised. As is apparent from Judge Chambers’ formulation, the relevant principle depends upon the operation of an estoppel which in turn requires evidence of a holding out and reliance. In this case the questions whether Forests had ostensible as distinct from actual authority to authorise the issue of the LOIs and, if so, whether Shipping relied on that ostensible authority were not addressed in the evidence. It is at any rate a possibility that some evidence about this could have been obtained if the point had been taken, particularly in view of the fact that Forests was a party to the application to challenge jurisdiction, notwithstanding that Shipping played no part in the application. It would be unfair to allow the point to be taken now that Forests has successfully challenged jurisdiction and has ceased to be a party to this action.[74]But even if we allow the new point to be raised, it is in my judgment a bad point, as submitted by Mr Bailey, for at least three reasons.[75]First, there is no evidence of any reliance by Shipping on any holding out of Forests by the Exporters. While that may be explained, as already discussed, by the fact that the point was not taken below, the fact remains that without such evidence, an essential element of the case is missing. Whether that gap could be plugged if the case were allowed to proceed is entirely speculative.[76]Second, the liability of an undisclosed principal arises only when the agent has actual authority to conclude a contract on behalf of the principal. The doctrine of undisclosed principal is already anomalous and should not be extended to the kind of fictional actual authority, arising as a result of an estoppel, described in the AJU Remicon case. That was not a case of an undisclosed principal, but a case where the agents were purporting to act on behalf of a principal. It is unnecessary to decide whether it is correct in the situation described by Judge Chambers to speak of the agent as acquiring actual authority as a result of an estoppel, but I should not be taken as endorsing that terminology. It is sufficient to say that this principle can have no application to a case of undisclosed principal.[77]Third, as Lord Sumption explained in the Playboy case, where he described the undisclosed principal rule as ‘an anomalous legacy of eighteenth and nineteenth century jurisprudence, which survives in the modern law on account of its antiquity rather than its coherence’, a feature of the relationship between an undisclosed principal and a third party is that it is mutual:
‘15. … The relationship between A and B’s undisclosed principal may not be consensual, but it is at least mutual. The undisclosed principal may not only sue but be sued on the contract. A may elect to sue the agent. If A is sued by the undisclosed principal, he may take any defences which would have been available to him as against B. …’
[78]That feature would be lacking in circumstances where the absence of any genuine actual authority is circumvented by a fictional actual authority created by virtue of an estoppel. It would mean that the party estopped would be liable on the contract, which is what the appellant seeks to achieve, but that it would be unable to sue on the contract as it could not rely on an estoppel against itself in order to found its cause of action.[79]For these reasons the Exporters have the better of the argument that they are not liable as undisclosed principals on the LOIs.

Disposal

[80]I would dismiss the appeal.

LADY JUSTICE FALK:

[81]I agree.

LORD JUSTICE ZACAROLI:

[82]I also agree.

Cited in 1 later judgment